Life sciences and biotech companies are increasingly seeing challenges in funding, resource management and compliance that affect their ability to succeed. In a recent webinar co-hosted by California Life Sciences and Scrubbed, our expert panel shared their insights on what is shaping financials in life sciences and biotech and how a fractional finance and accounting model can help firms grow without sacrificing quality or compliance.
Industry Challenges
The life sciences sector faces significant financial hurdles, particularly in funding and development costs.
- Access to Capital: According to Ismaila Sougoufara, Chief Accounting Officer, and Finance VP for Jaguar Health, “Venture capital funding dropped by 46% between 2021 and 2024,” making capital acquisition much more competitive. Gliezel David, Director of Technical Accounting Services at Scrubbed, pointed out that it is more important than ever for firms to develop “careful strategies to secure funding, identify the right partner, build that partnership and negotiate deals effectively.” This often requires specialized expertise such as technical accounting support to ensure accuracy during complex transactions.
- R&D Costs: The lengthy drug development process, from finding and enrolling patients to carrying out clinical trials, often means it can take a decade or more to bring a new product to market. Gliezel’s opinion is that firms need a strong team that can handle both the scientific and operational sides, including financial planning and monitoring. “Accurate accounting of transactions is crucial even at the initial stages of starting a company or a project,” she advised.
- Regulatory Compliance: “Keeping up with these rules is not just a box to check: It’s a must for getting products approved onto the market,” said Gliezel. “An effective risk management plan is key to staying in compliance, and failing to do so can lead to expensive penalties, delays, and damage to the company’s reputation.”
How Fractional Finance Teams Can Help
Fractional finance teams can provide valuable support and enhance in-house capabilities by offering tailored solutions, especially for small to mid-size biotech and life sciences companies.
- Cost-effective Expertise: A key advantage of fractional teams is their cost-effectiveness, especially in competitive markets. “If you are in California, biotech talent is extremely scarce,” said Ismaila. “Finding talented people comes at a very high cost.” Kevin Musni, Scrubbed’s Accounting Lead for the biotech and life sciences industries added, “Fractional support opens the door to the world; you can access talent from everywhere.” Because of this wider talent pool, fractional teams allow firms to access specialized knowledge at a fraction of the cost of full-time hires.
- Specific Expertise For Different Project Phases: A fractional finance team can bring specific expertise required for various phases, such as financial modeling help when accounting for a complex transaction or support for raising investor capital. This is especially valuable in industries like real estate, where tailored real estate accounting solutions can address project-specific financial needs. Companies can access the necessary high-level financial skills on demand without the long-term commitment of hiring full-time staff for whom there isn’t a permanent need.
- Scalable Solutions: The ability to access financial skills on demand allows firms to scale operations up and down as needed and focus internal resources on core activities. “Engaging a fractional finance team is a strategic decision,” said Gliezel. “By outsourcing finance functions, a company can concentrate and focus on their core activities, including drug development, clinical trials and regulatory approval.” This strategy also allows firms to pivot quickly to adapt to rapid changes in the market, outcomes of clinical trials, and changes in the regulatory environment without compromising quality or increasing costs.
Success Story: Jaguar Health
Jaguar Health’s experience with fractional finance teams demonstrates a compelling success story in the biotech sector. When their Chief Accounting Officer, Ismaila, inherited the partnership with Scrubbed, he had the option to move operations in-house a year later. However, the quality and value provided convinced him to maintain the fractional relationship.
Working with Scrubbed, Jaguar Health transformed its financial reporting from below-average standards to SEC-equivalent quality across all levels. The relationship gradually expanded to include technical memo preparation, transactional support, tax services, and corporate finance functions. This comprehensive support enabled the company to focus more on strategic vision while improving operational excellence.
The success of the partnership hinged on the Scrubbed team’s commitment to quality, accountability, and timely delivery. The fractional team provided consistent support and maintained operational stability even during internal staff turnover. This human capital aspect proved crucial, as the team demonstrated not just technical expertise but also a deep commitment to Jaguar Health’s goals and vision, going beyond traditional consultant relationships to become a true strategic partner.
Forward-looking Trends and Predictions
The industry is evolving with several key developments, particularly in AI and automation. As Ismaila emphasized: “AI is just the tool… companies need to start assessing right now… how they can implement AI right now as part of what I call IA – innovative automation”. Data visualization tools also help streamline the analytics process, bringing visibility to the patterns behind the data and enhancing financial analysis. Advances in Blockchain are making data security and transparency easier to maintain.
Fractional finance teams will often have experience with different systems and how those systems interact and help firms create automated processes.
How to Make the Most of Partnering with a Fractional Financial Team
The success of fractional teams depends heavily on finding the right partner. According to Ismaila, “The most important part in being able to succeed is human capital… committed to quality, committed to accountability.”
- Start Early: Kevin stressed the importance of early financial planning: “It’s really important to set a solid financial foundation at the very beginning of the life of biotech and bioscience company because sometimes we tend to focus too much of our resources in the R&D forgetting that finance is something that’s going to help you get to the finish line.” The key is to start by defining the firm’s needs, whether that’s day-to-day bookkeeping, financial reporting, or tax compliance, and evaluating the experience of potential providers in meeting those needs.
- Start Small: Ismaila’s experience is that you can overcome fears about working with a fractional team and build a successful relationship by starting small. “For those who are reluctant to start hiring fractional support, you could hire gradually, start small, and then scale,” he said. “Find a fractional partner willing to provide a trial period that would not lock you in.”
- Think Strategically: The emphasis should be on sustainable practices that will help the company grow. “Ethical sourcing and patient access programs are important for ensuring fairness and responsibility,” said Gliezel. Integrating accurate sustainability and ESG reporting will also support the company’s goals.
Following these tips will help firms find the right fractional team that can help the business control costs, tap into specialized knowledge, and streamline compliance. “Finding the right partner is super important, especially when it comes to complex accounting tasks that often pop up in this industry,” said Gliezel.
Get Started with Your Fractional Finance Team, Fractional finance teams offer a strategic solution that combines expertise, flexibility, and scalability for life sciences and biotech companies who want to stay competitive while managing costs.
The key lies in finding the right partner who understands industry-specific challenges and can deliver consistent quality.
